McKnight and others as Trustees in the Lynwood/Craig Family Trust v Craig HC Auckland CIV-2009-412-000919

[2011] NZHC 627

IN THE HIGH COURT OF NEW ZEALAND DUNEDIN REGISTRY

CIV-2009-412-000919

UNDER  the Trustee Act 1956

BETWEEN  RICHARD STEWART MCKNIGHT GRAHAM ROSS WILKINSON ANDERSON LLOYD TRUSTEE COMPANY LIMITED

AS TRUSTEES IN THE LYNWOOD/CRAIG FAMILY TRUST First Plaintiffs

ANDRICHARD STEWART MCKNIGHT GRAHAM ROSS WILKINSON ANDERSON LLOYD TRUSTEE COMPANY LIMITED

AS TRUSTEES IN THE LYNWOOD/CHRISTINE CRAIG FAMILY TRUST

Second Plaintiffs

ANDNATHANIEL TOLLETH CRAIG CHRISTINE ANNE CRAIG PHILLIP NATHANIEL CRAIG SIMON MATTHEW CRAIG ELIZABETH ANNE WILKINSON ALISTAIR DAVID WILLIAMS ROGER NEILL WILLIAMS Defendants

Counsel:         F B Barton and A Cunninghame for Plaintiffs

A J Logan for Minor and Unborn Children

Judgment:      29 March 2011

JUDGMENT OF HON JUSTICE FRENCH

[1]      On 22 June 2010 I delivered a judgment granting the plaintiffs’ application

under s 64A of the Trustee Act 1956 for an order approving a variation of two trusts on behalf of minor and unborn beneficiaries.

MCKNIGHT V CRAIG HC DUN CIV-2009-412-000919 29 March 2011

[2]      The judgment has not yet been sealed.

[3]      On 8 March 2011 the plaintiffs filed a memorandum seeking a recall of the judgment to enable two further variations to be made that were not the subject of the previous application.

[4]      Due to a misunderstanding between the plaintiffs and their counsel, counsel had not appreciated that absolute equality between Mr and Mrs Craig was an underlying issue.

[5]      That misunderstanding has resulted in the draft trust deed that was previously submitted for approval retaining a provision whereby Mrs Craig’s entitlement in the trust remains only for so long as she remains the wife of Mr Craig.  Mr Craig feels strongly  that  when  the  family  assets  have  been  built  up  as  a  result  of  joint endeavours in the course of a long and happy marriage, it is unfair that Mrs Craig’s entitlement should be described in this way.

[6]      The second amendment  sought  is the deletion of a clause referring to a property at Wanaka which is no longer owned by either trust.

[7]      Counsel for the minor and unborn beneficiaries, Mr Logan, has filed a memorandum in response to the application.

[8]      In his memorandum, Mr Logan states that the updating of the trust deed to exclude the obsolete reference to 21 Kowhai Drive, Wanaka, is unobjectionable. However, in his submission, the substitution of a named person, Christine Anne Craig, for “the wife of Nathaniel” requires more elaborate consideration.

[9]      Mr  Logan  points  out  that  a  potential  detriment  to  minor  and  unborn beneficiaries could arise if, for example:

[i]       assets of the two existing trusts are settled on the new trust;

and

[ii]      the  marriage  of  Nathaniel  and  Christine  Craig  terminates through dissolution of their marriage; and

[iii]   notwithstanding  the  dissolution,  the  trustees  make  a distribution to Christine (or a resettlement in her favour) when she no longer has the status as Nathaniel Craig’s wife; and

[iv]      for some reason, the distribution or resettlement does not inure for the advantage of any minor or unborn beneficiaries (as would be the case if the recipient spent the distribution or it were put in an investment which failed).

[10]     However, having considered the issue, Mr Logan goes on to state: [i] The scenario is speculative.

[ii]      Existing trust powers could be used to produce the same or similar  outcomes,   detrimentally  affecting  the   minor  and unborn beneficiaries.

[iii]    Having regard to the length of the marriage, there are countervailing reasons relating to the “welfare and honour of the family” which would justify the Court in approving the amendments.

[11]   He concludes that the Court may give favourable consideration to the amendments now proposed.

[12]     I agree with that assessment.

[13]     I also accept that as the terms of the new trust have not been finalised by sealing of a Court order, it would seem to be an unnecessarily inefficient and costly exercise to require the plaintiffs or the trustees of a new trust to commence a fresh set of proceedings seeking Court approval.

[14]     There is no opposition to the application, and all parties consent.

[15]     As I have already mentioned, the judgment has not yet been sealed.  Under r

452(3) of the High Court Rules, the Court has the power to recall the judgment.  I consider this is an appropriate case for the judgment to be recalled, the circumstances here constituting “special reasons”.

[16]     The application is accordingly granted, and my judgment of 22 June 2010 is recalled.   The proposed arrangement set out in paragraph 17 of the statement of claim is approved on condition that the Craig Family Trust Deed is in accordance with the amended draft filed on 2 June 2010, subject to two further amendments:

a)        The deletion of clause 7.4(a).

b)        To redefine the beneficiaries in clause 1.1 as:

[i]         Nathaniel Thomas Craig (“Nathaniel”).

[ii]        Christine Anne Craig (“Christine”).

[iii]       Any children of Nathaniel and/or Christine (“the Children”).

[iv]       Any children of the Children (“the Grandchildren”).

[v]        Any parent, brothers, sisters, nephews or nieces of Nathaniel and/or Christine.

[vi]      Any charitable body or institution or charitable purpose nominated by the Trustees in New Zealand.

[vii]      The Trustees (in their capacity of Trustees) of any trust of which only Beneficiaries referred to in the preceding subparagraphs are beneficiaries.

And to delete the definition of “wife” in clause 7.1.

Solicitors:

Anderson Lloyd, Dunedin

Ross Dowling Marquet Griffin, Dunedin